gnasher
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Post by gnasher on Feb 21, 2017 6:32:23 GMT
I have recently opened an Octopus Choice account and added a few £k. The target rate, i.e. as on the home page when I invested was about 4.8, is is still 4.8 now.
However the rate I have achieved on my initial investments is only 4.27% ?? Sorry but this is very misleading. Why did I not get something closer to 4.8?
Was I 'unlucky'? Is the target rate simply wrong, or perhaps referring to something else other than the rate that a potential investor can expect to get in practice.
All in all not a good initial experience.
I guess I would not mind too much IF my loans have a lower risk profile, but I have no way of knowing that.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Feb 21, 2017 7:46:57 GMT
I have no loan parts as high as 4.8%. They are nearly all either 4.0% or 4.73% yielding a composite rate of 4.38%. But at least it beats AC's QAA and RS. Assuming Choice is supported by the parent company then it is probably the lowest platform risk.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Feb 21, 2017 8:25:40 GMT
Been raised before p2pindependentforum.com/post/167405/thread and directly. Supposedly they are looking to change how rates are indicated on site. The target rate is merely an average of all open loans. When they allocate funds to loans, they start with the loan with the largest % availibility and work down the list until the investment is allocated across 10-20 loans. The problem currently is that most of the loans with high availability are 4% which results in a much lower rate than the target rate. I did some analysis of the open loan book and concluded that it is currently impossible to achieve anywhere near the target rate at this time with their system. To do so they would need ignore most of the loans with more than 30% unfilled. A point they accepted. So were you unlucky? Yes, because you invested when there was a glut of loans at a low rate. No, because everyone else is in the same boat. The open loan book is shown on the statistics page so you should be able to see how risky your loans are and if you do a rough average of the loans with largest unfilled amount predict the rate you are likely to get on future investments (Site doesnt work on my mobile devices) |
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gnasher
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Post by gnasher on Feb 21, 2017 8:37:51 GMT
As a new arrival here I quite like the overall OC model for a proportion of my p2p funds, i.e. for my low maintenance, low risk, low % rate, invest and forget stuff, and I hope it is all of those things. I do not have a problem with the rate of 4.27% if indeed it is all of those things. Yes I agree it is a better rate than RS rolling, AC QAA and 30DAA (just!) etc.
However advertising a headline target of 4.8% then within a few hours doling out loan parts with an average of 4.27% does not look good.
Seems to me that that is potentially mis-selling!
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gnasher
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Post by gnasher on Feb 23, 2017 13:56:44 GMT
Within the last few days I see that the headline target rate has dropped from 4.8% to 4.2% now. I added some more funds to my account today and that reduced my overall rate from 4.27 to 4.24, so it seems like the 4.2% rate is rather more accurate now.
So, have they made a change to the way it is calculated, or does it vary in accuracy from time to time?
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Feb 23, 2017 14:26:18 GMT
Within the last few days I see that the headline target rate has dropped from 4.8% to 4.2% now. I added some more funds to my account today and that reduced my overall rate from 4.27 to 4.24, so it seems like the 4.2% rate is rather more accurate now. So, have they made a change to the way it is calculated, or does it vary in accuracy from time to time? Difficult to tell. I make the current average rate on all available loans 4.67% but the avaliable rate is showing 4.4%. Current rate that their system will produce is 4.27% so allowing for uneven distribution it does seem more accurate. Not sure how often the loan book statistics updates. Maybe theyve gone to a weighted average. I note there are only 15 loans with availability over 1% so could be heading towards a loan famine again shortly. Edit looking at jonah's tracker it went down to about 4% just before midday before bouncing back up to current level.
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Post by davee39 on Feb 23, 2017 14:29:49 GMT
The rate is distorted when relatively small amounts of higher paying loans are offered for sale. The problem with the average is that £5m @4% caries as much weight as £10 at 5%. Better would be an average of the top 10 loans, and a change in the description.
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Post by vanessaiman on Feb 23, 2017 17:26:42 GMT
Hi all,
First and foremost, thank you for your feedback these past few weeks regarding our target rate.
We've taken your feedback on-board and improved the calculation of the target rate in order to make it more representative of the achievable rate available at any given point in time.
Our systems now calculate the 20 loans that you will be allocated to (provided that the amount invested is at least £200), instead of averaging the interest rate of our all loans which are currently open for investment.
We found that the target rate was influenced by some loans that had a higher interest rate but were very unlikely to be allocated to investors, who may have just invested into Choice.
We’re constantly working on features that give our customers transparency on their loans and personal rates – so thank you again for your feedback and support so far.
If you have any further questions or would like to discuss further, please feel free to let me know.
Best,
Vanessa
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gnasher
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Post by gnasher on Feb 24, 2017 11:03:58 GMT
.... and now just to complete this loop I have added another chunk at a target rate of 4.1% and my actual invested rate went from 4.24 back UP to 4.27, so perhaps it is now under estimating, or perhaps this is just natural variability that is to be expected. Anyway it is certainly much better and less misleading than it was. Thanks.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Feb 24, 2017 12:05:21 GMT
.... and now just to complete this loop I have added another chunk at a target rate of 4.1% and my actual invested rate went from 4.24 back UP to 4.27, so perhaps it is now under estimating, or perhaps this is just natural variability that is to be expected. Anyway it is certainly much better and less misleading than it was. Thanks. Sounds like it is working as it should. In my discussions with them I pointed out that while lenders should always be able to get close to the target rate, allowing for fluctuations as a result of some timelag between fund crediting & deployment changing rate dynamics, it should also be quite possible for lenders to exceed the target rate for the same reasons. So well down Octopus and thanks for listening.
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